Target Corporation TGT and Walmart Inc. WMT released their September quarter results just a day apart. Target’s management highlighted that its customers were most active during sales and promotional events, while Walmart’s leadership attributed 75% of its market share growth to households earning six-figure incomes.
Target’s executive vice president and chief commercial officer company Rick Gomez said that their consumers “know there are deals to be found, they’re willing to wait for sales and willing to search across multiple retailers.” While the latter’s chief executive officer, Doug McMillon attributed 75% of their market share gains to "households earning more than $100,000."
What Happened: Gomez highlighted that Target’s consumers were looking for promotions with an example. “Our Target Circle week this quarter was one of our biggest yet. However, we saw a more pronounced sales dip both the week before and the week after the event, showing just how planful consumers are in seeking out promotions when they shop.”
“Similarly, we saw consumers lean into everyday essential stock-up promotions throughout the quarter to further stretch their monthly budgets. We saw a strong reaction to promotions throughout the quarter,” he added.
On the flip side, John David Rainey the chief financial officer of Walmart re-affirmed his CEO’s view and said, “we're seeing higher engagement across income cohorts with upper-income households continuing to account for the majority of our share gains.”
Why It Matters: Shares of Target Corporation plunged by 21.41% to close at $121.72 apiece, on Wednesday, as compared to a 0.16% advance in the NYSE Composite Index. Target’s third-quarter adjusted earnings per share of $1.85, missed the street view of $2.30. Quarterly total revenue of $25.67 billion (+1.1% year over year) missed the analyst consensus estimate of $25.90 billion.
Brian Cornell, chair and chief executive officer of Target said, "We encountered some unique challenges and cost pressures that impacted our bottom-line performance.” The third-quarter gross margin rate decreased by 0.2 percentage points to 27.2%.
Also read: Target Q3 Earnings: Supply Chain Chaos Hits Bottomline, Slashes Annual Profit Outlook, Stock Tanks
On Tuesday, Walmart’s third-quarter results beat estimates and the fiscal 2025 guidance was raised. Its shares rose 3% on Tuesday, while it was further up by 0.67% to $87.18 apiece as per Wednesday’s close.
Walmart’s ales were at $169.59 billion, up 5.5% year over year or 6.2% (at constant currency), beating the consensus of $167.72 billion. The gross margin rate was up 21 bps to 24.2% aided by improvement in the Walmart U.S. Operating income was up by $0.5 billion or 8.2% year over year at $6.7 billion.
Price Action: On a year-to-date basis, Walmart has surged by 64.19%, while Target is down by 14.94%, according to Benzinga Pro data. The NYSE Composite Index was up 17.26% in the same period. In Thursday’s premarket, TGT shares were up 0.5%.
Image via Flickr/ Mike Mozart
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